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Rescinding a Contract: Three Important Steps - Oh So Useful


Like everywhere else, court proceedings are governed by strict procedural rules, which have to be complied with. The new Civil Procedure Code made the process even more formal and increased the requirements related to presenting evidence by binding them with short preclusive terms – for example upon filing of the civil action, you have to support it with all written evidence you have and you wish to use.

You are also obliged to point out all oral evidence you are about to use (the witnesses you wish to be called and testify). Failure to do so may prevent you from further replenishment of the case with evidence. Although the facts and the law are on your side, sometimes the formal procedural omissions may cost you the case. Therefore, you have to rely on an experienced lawyer, well acquainted with these rules.

III.    Third step – not obligatory but so useful.

The length of the court proceedings and the current world financial crunch, which has affected Bulgarian business as well, may put you in a very unfortunate situation. Even though you have won the case, at the end of the day you find out that the defendant had stripped itself from its assets and it is difficult to get remedy for the damages you have sustained.

Therefore, it is highly recommended, in order to “secure” an outcome of your civil action, to conduct a special, preliminary procedure, called security procedure.

This procedure may be defined as subsidiary to the main claim. It is initiated with a security application filed before the court, by way of which the applicant (future claimant) demands the court to attach certain assets (real estates, bank accounts, movables) of the opposite party (future defendant), which will secure the future claimant during the period of the main litigation. Thus, regardless of what changes occur in the financial status of the future defendant, the attached assets will guarantee that the judgment is successfully enforced.

Like the main claim, the security application must be very exhaustive and supported will every possible evidence so that it convinces the court that the future claim is “grounded on the balance of probabilities”, so the serious harming of the future defendant’s rights, which the restraint will cause, is justified enough. Yet, because during the first instance of this procedure the future defendant is unable to defend itself and present its own point of view and its own objections and evidence (see below), very often the court rules in favour of the applicant and allows the requested restraint, but only under the condition that the applicant deposits a “guarantee”, normally to the amount of 10% of the material interest on the future main claim.

This is not a charge or a court fee and is fully refundable upon winning the main court case – it serves as additional evidence that the intentions of the applicant are serious and not simply aiming to harm the future defendant. Yet, you have to be prepared to dispose of such amount. The court fees and expenses on the security procedure are not so significant.

This procedure takes less time, compared to the main one, because it involves maximum two phases – first instance and second instance, in case any of the parties appeals against the ruling of the court of first instance. Besides, the security proceedings are held behind closed doors – they are not held in open sessions where both parties would be able to present their position and evidence.

The main objective is to surprise the future defendant with the attachment before the latter attempts to dispose of its assets and harm the claimant’s interests. The judge passes a Definition in a closed session, solely on the basis of the security application and the evidence, enclosed by the applicant, without the presence of the parties and without oral or written pleadings. Only after the attachment is actually imposed, the future defendant is notified and may appeal against it, but by that time the attachment will already be in force. Both the first and eventually the second instance of this procedure are conducted in short terms in order to further the efficiency and timeliness of the outcome. After the end of the first instance you will be given a certain time period by the judge to file the main claim, otherwise the attachment will be withdrawn.

So, as a summary, given that you have a good case you have three main steps to take – to rescind the contract, to secure your claim, and to initiate a court case for protection of your rights. And be patient!

Roumen V Petrov
Asya Mandjukova

GPNG Law Firm, Sofia, Bulgaria